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8-K/A - 8-K/A - YADKIN FINANCIAL Corpform8-ka4q12.htm




Yadkin Valley Financial Corporation Positions for the Future by Successfully Executing Problem Asset Disposition Plan; Announces Results for
Fourth Quarter 2012

Fourth Quarter Highlights:

The Company successfully executed its announced accelerated asset disposition plan, using the proceeds of the capital raise announced last quarter.
As a result of the asset disposition plan, nonperforming loans decreased $34.2 million to $22.8 million, or 1.71% of total loans, down from 4.12% at September 30, 2012 and nonperforming assets decreased $47.8 million to $31.6 million, or 1.64% of total assets, down from 4.13% at September 30, 2012.
The ratio of loan loss reserve to nonperforming loans, a key credit quality indicator, increased to 110.22% in the fourth quarter of 2012, as compared to 47.73% in the prior quarter.
Adversely classified loans decreased $47.2 million to $49.8 million at December 31, 2012 as compared to $97.1 million at September 30, 2012. The ratio of adversely classified assets to Tier 1 capital and the loan loss reserve was 29.79% at the end of the fourth quarter, down from 60.07% at the end of the third quarter of 2012.
Net loss to common shareholders for the fourth quarter of 2012 was $25.3 million, or $1.21 per diluted share. The increased loss is due primarily to credit loss from the announced asset disposition plan carried out in the fourth quarter.
Cost of deposits continued to decrease, down to 0.84% from 0.91% in the third quarter of 2012. Core deposits now represent 55.1% of total deposits, up from 52.2% last quarter as our mix shows further improvement.
As of December 31, 2012, the Company's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3%, respectively. In addition, our tangible common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter, compared to 5.44% at the end of the third quarter of 2012.

2012 Highlights:

Net loss to common shareholders for the full year 2012 was $12.6 million, or $0.64 per diluted share.
Year over year, the Bank has shown dramatic improvements in credit quality due to management's prudent decisions regarding problem asset disposition.
Capital ratios have improved significantly year over year due to capital preservation efforts by the Company in addition to $45 million in new capital raised during the fourth quarter of 2012.
Core deposits increased $42.9 million, or 5.01%, in 2012, and core deposits now represent 55.1% of total deposits, as compared to 49.4% at December 31, 2011.

Elkin, NC - January 24, 2013 - Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced today financial results for the fourth quarter and full year ended December 31, 2012. Net loss to common shareholders for the quarter was $25.3 million, or $1.21 per diluted share, compared to net loss of $81,000, or $0.00 per diluted share, in the third quarter of 2012, and net income of $2.2 million, or $0.11 per diluted share, in the fourth quarter of 2011. Net loss to common shareholders for the year was $12.6 million, or $0.64 per diluted share, compared to net loss of $17.4 million or $0.95 per diluted share in 2011.

Joe Towell, President and CEO of Yadkin Valley Financial, commented, “As we outlined our accelerated asset disposition plan last quarter, we have executed our plan using the proceeds from our capital raise. We have successfully





sold $49 million in problem loans and other real estate owned as of December 31, 2012, and we have taken additional write downs of $14 million. We achieved our internal goals relative to the reductions we took on these assets and the prices at which they were sold. This asset disposition yields dramatically improved credit metrics, with our nonperforming assets to total assets ratio dropping to 1.64%, down from 4.13% in the third quarter.

For the fourth quarter, we are very pleased to report that we have lowered our cost of deposits to 0.84%, down from 0.91% in the prior quarter. However, the rate environment continues to negatively impact our margin. Despite that, our net interest income is in a position to improve over the next several quarters due to the disposition of many non-earning assets during the fourth quarter and our redeployment of funds into earning assets.

2012 was a breakthrough year in the life of our Company as we worked through TARP, a capital raise, and improving the quality of our balance sheet. While we took larger charge-offs in the fourth quarter, we are pleased with the success we've had with our accelerated asset disposition. As we look toward 2013, we believe our future has great potential for increased profitability as we serve our customers throughout the Carolinas."


Fourth Quarter 2012 Financial Highlights

Asset Quality

The Bank's key asset quality metrics are vastly improved compared to the prior quarter due to the successful execution of the asset disposition plan announced last quarter. First, nonperforming loans decreased for the fifth consecutive quarter, down $34.2 million to $22.8 million in the fourth quarter of 2012 from $57.1 million at September 30, 2012. In addition, our adversely classified loans, which include substandard, substandard-impaired, and doubtful loans, decreased $47.2 million compared to the third quarter of 2012.


 
 
Nonperforming Loan Analysis
 
 
(Dollars in thousands)
 
 
December 31, 2012
 
September 30, 2012
Loan Type
 
Outstanding Balance
% of Total Loans
 
Outstanding Balance
% of Total Loans
Construction/land development
 
$
4,636

0.35
%
 
$
12,785

0.92
%
Residential construction
 
2,749

0.21
%
 
3,712

0.27
%
HELOC
 
1,041

0.08
%
 
3,950

0.29
%
1-4 family residential
 
3,123

0.23
%
 
6,370

0.46
%
Commercial real estate
 
8,023

0.60
%
 
21,420

1.54
%
Commercial & industrial
 
2,790

0.21
%
 
8,293

0.60
%
Consumer & other
 
455

0.03
%
 
523

0.04
%
Total
 
$
22,817

1.71
%
 
$
57,053

4.12
%



Other real estate owned (OREO) totaled $8.7 million at December 31, 2012, a decrease of $13.6 million compared to $22.3 million at September 30, 2012. As part of our asset disposition plan, approximately 59 OREO properties were marked to our best estimate of an exit price at December 31, 2012 in anticipation of including these properties in a public auction during the first quarter of 2013. The decrease in total OREO in the fourth quarter is due to $6.1 million in sales for the quarter and taking the write downs, and we do not expect further significant loss following the completion of the auction. Total nonperforming assets at December 31, 2012 were $31.6 million, or 1.64% of total assets, a decrease of $47.8 million from September 30, 2012, due to the accelerated decrease in nonperforming loans and OREO balances.






During the fourth quarter of 2012, the provision for loan losses was $31.6 million, an increase of $27.3 million from the third quarter of 2012. The increase in provision was driven by the increase in credit losses for the quarter due to the execution of the accelerated nonperforming loan disposition plan. Total net charge-offs for the fourth quarter of 2012 were $33.6 million, or 9.74% of average loans on an annualized basis.

At December 31, 2012, the allowance for loan losses was $25.1 million, compared to $27.2 million at September 30, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.92% in the fourth quarter of 2012, down from 2.00% in the third quarter of 2012. The reserve remains at a conservative level due to continued economic uncertainty and other external factors in our markets. Out of the $25.1 million in total allowance for loan losses at December 31, 2012, the specific allowance for impaired loans accounted for $1.4 million, down from $3.7 million in the third quarter. The remaining general allowance of $23.7 million attributed to unimpaired loans was up slightly from $23.5 million at the end of the third quarter.

Net Interest Income and Net Interest Margin

Net interest income was down quarter over quarter, totaling $14.7 million for the fourth quarter of 2012. Due to the low rate environment and the Company's increased cash position at year end as a result of the asset sale, the net interest margin experienced compression, ending the quarter at 3.28%. We expect improvement in both net interest income and the net interest margin in coming quarters due to the elimination of nonperforming assets during the fourth quarter of 2012, the deployment of excess liquidity on the balance sheet, the repricing of our time deposits, and our continued shift in deposit mix.

In the fourth quarter of 2012, we continued to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 55.1% of total deposits, our highest percentage in the last eight quarters, as we focus on core deposit growth. As a result of this strategy, our cost of deposits decreased to 0.84% for the quarter as compared to 0.91% in the third quarter of 2012.

Non-Interest Income

Non-interest income decreased $3.7 million to $986,000 compared to $4.7 million in the third quarter of 2012. This significant decrease is due primarily to the $2.1 million loss on sale of loans recorded as a result of the asset disposition plan and the $1.0 million loss on sale of subsidiary related to the Company's sale of its mortgage reinsurance line of business. However, income from fees increased 15.1% and income from service charges increased 5.98%, both compared to the prior quarter.

Non-Interest Expense

Non-interest expense increased in the fourth quarter to $22.7 million as compared to $14.8 million in the third quarter of 2012. This increase was due to increased cost of OREO because of the write downs taken on OREO properties to our best estimation of an exit price in anticipation of an auction of these properties in the first quarter of 2013.

Balance Sheet and Capital

Total assets increased $3.1 million during the fourth quarter of 2012 as the Company's balance sheet began to stabilize. Gross loans held-for-investment decreased $49.4 million compared to the third quarter of 2012, due to the loans sold through our accelerated asset disposition plan. Excluding these loan sales, our gross loans decreased slightly quarter over quarter, as we continue to implement a more aggressive business acquisition strategy. Total deposits decreased $19.8 million, which primarily consists of higher-cost time deposits, as our core deposits increased $35.7 million compared to the prior quarter.

The Company's capital ratios have strengthened and continue to exceed all regulatory requirements. As of December 31, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.9%, 11.7%, and 13.0%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3% respectively, for the holding company as of December 31, 2012. In addition, the Company's tangible





common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter. For capital adequacy purposes, leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio must be in excess of 5.00%, 6.00%, and 10.00%, respectively, to be considered well-capitalized. Regulatory capital ratios for the Company improved this quarter primarily due to increased capital levels from the Company's capital raise during the fourth quarter of 2012.

Conference Call

Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EST on Thursday, January 24, 2013 to discuss financial results, business highlights, and outlook. The call may be accessed by dialing 877-359-3650 at least 10 minutes prior to the call. A webcast of the call audio may be accessed at http://investor.shareholder.com/media/eventdetail.cfm?eventid=124449&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until January 31, 2013 by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 91530348.


####

About Yadkin Valley Financial Corporation

Yadkin Valley Financial Corporation is the holding company for Yadkin Valley Bank and Trust Company, a full-service community bank providing services in 34 branches throughout its two regions in North Carolina and South Carolina. The Western Region serves Avery, Watauga, Ashe, Surry, Wilkes, Yadkin, and Iredell Counties. The Southern Region serves Durham, Orange, Granville, Mecklenburg, and Union Counties in North Carolina, and Cherokee and York Counties in South Carolina. The Bank provides mortgage lending services through its mortgage division, Yadkin Valley Mortgage, headquartered in Greensboro, NC. Securities brokerage services are provided by Main Street Investment Services, Inc., a Bank subsidiary with four offices located in the branch network. Yadkin Valley Financial Corporation's website is www.yadkinvalleybank.com. Yadkin Valley shares are traded on NASDAQ under the symbol YAVY.


SAFE HARBOR

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. Forward looking statements generally include words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions.  These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties.  For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward-Looking Statements” on pages 45-47 of Yadkin Valley Financial Corporation's quarterly report filed on Form 10-Q with the SEC for the quarter ended September 30, 2012 and in the sections entitled “Risk Factors” in quarterly reports filed on Form 10-Q for the quarters ended September 30, 2012, June 30, 2012 and March 31, 2012, annual report filed on Form 10-K for the year ended December 31, 2011, and, once available, the annual report filed on Form 10-K for the year ended December 31, 2012.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.


For additional information contact:

Joseph H. Towell
President and Chief Executive Officer
(704) 768-1133
joe.towell@yadkinvalleybank.com

Jan H. Hollar
Executive Vice President and Chief Financial Officer
(704) 768-1161
jan.hollar@yadkinvalleybank.com






 Yadkin Valley Financial Corporation
 
 
 
 
 
 
 
 
 
 Consolidated Balance Sheets (Unaudited)
 
 
 
 
 
 
 
 
 
 
 (Amounts in thousands except share and per share data)
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011 (a)
 Assets:
 
 
 
 
 
 
 
 
 
 Cash and due from banks
$
36,125

 
$
26,048

 
$
25,642

 
$
36,478

 
$
40,790

 Federal funds sold
50

 
50

 
50

 
50

 
50

 Interest-earning deposits with banks
102,221

 
97,124

 
75,895

 
67,443

 
52,078

 
 
 
 
 
 
 
 
 
 
 U.S. government agencies
27,527

 
32,869

 
23,058

 
23,433

 
23,726

 Mortgage-backed securities
230,894

 
221,806

 
248,674

 
263,230

 
232,494

 State and municipal securities
84,567

 
54,769

 
66,607

 
72,751

 
73,118

 Common and preferred stocks
132

 
1,112

 
1,133

 
1,111

 
1,084

Total investment securities
343,120

 
310,556

 
339,472

 
360,525

 
330,422

 
 
 
 
 
 
 
 
 
 
 Construction loans
131,981

 
147,408

 
189,840

 
196,991

 
202,803

 Commercial, financial and other loans
193,810

 
190,294

 
189,245

 
187,037

 
200,750

 Residential mortgages
140,931

 
174,728

 
167,774

 
166,563

 
179,047

 Commercial real estate loans
617,468

 
615,733

 
594,798

 
605,539

 
631,639

 Installment loans
33,426

 
34,216

 
34,177

 
34,926

 
35,465

 Revolving 1-4 family loans
191,888

 
196,489

 
196,547

 
196,818

 
201,220

Total loans
1,309,504

 
1,358,868

 
1,372,381

 
1,387,874

 
1,450,924

 Allowance for loan losses
(25,149
)
 
(27,231
)
 
(28,797
)
 
(30,062
)
 
(32,848
)
Net loans
1,284,355

 
1,331,637

 
1,343,584

 
1,357,812

 
1,418,076

 Loans held for sale
27,679

 
24,766

 
24,867

 
20,548

 
19,534

 Accrued interest receivable
6,376

 
6,229

 
6,512

 
6,932

 
6,745

 Bank premises and equipment
41,849

 
41,460

 
41,547

 
41,861

 
42,120

 Foreclosed real estate
8,738

 
22,294

 
25,573

 
28,751

 
24,966

 Non-marketable equity securities at cost
4,154

 
4,155

 
4,630

 
6,130

 
6,130

 Investment in bank-owned life insurance
26,433

 
26,274

 
26,114

 
26,091

 
25,934

 Core deposit intangible
2,653

 
2,914

 
3,180

 
3,455

 
3,733

 Other assets
39,685

 
26,871

 
28,273

 
20,530

 
22,610

Total assets
$
1,923,438

 
$
1,920,378

 
$
1,945,339

 
$
1,976,606

 
$
1,993,188

 
 
 
 
 
 
 
 
 
 
 Liabilities and shareholders' equity:
 
 
 
 
 
 
 
 
 
 Deposits:
 
 
 
 
 
 
 
 
 
 Non-interest bearing
$
273,896

 
$
256,402

 
$
244,191

 
$
235,417

 
$
229,895

 NOW, savings and money market accounts
624,460

 
606,220

 
613,051

 
626,538

 
625,560

 Time certificates:
 
 
 
 
 
 
 
 
 
 $100 or more
316,146

 
342,356

 
348,072

 
356,793

 
360,388

 Other
417,160

 
446,482

 
468,049

 
492,072

 
515,498

Total deposits
1,631,662

 
1,651,460

 
1,673,363

 
1,710,820

 
1,731,341

 
 
 
 
 
 
 
 
 
 
 Borrowings
105,136

 
102,299

 
99,310

 
105,723

 
105,539

 Accrued expenses and other liabilities
15,846

 
11,383

 
18,087

 
16,571

 
15,722

Total liabilities
1,752,643

 
1,765,142

 
1,790,760

 
1,833,114

 
1,852,602

 
 
 
 
 
 
 
 
 
 
 Total shareholders' equity
170,794

 
155,236

 
154,579

 
143,492

 
140,586

 Total liabilities and shareholders' equity
$
1,923,438

 
$
1,920,378

 
$
1,945,339

 
$
1,976,606

 
$
1,993,188

 
 
 
 
 
 
 
 
 
 
 Period End Shares Outstanding
43,151,646

 
20,003,688

 
20,003,688

 
19,506,188

 
19,526,188


(a) Derived from audited consolidated financial statements

 Yadkin Valley Financial Corporation
 
 
 
 
 
 
 
 
 





 Consolidated Income Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 Three Months Ended
 
 (Amounts in thousands except share and per share data)
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011 (a)
 
 
 
 
 
 
 
 
 
 
 Interest and fees on loans (b)
$
17,338

 
$
17,735

 
$
17,944

 
$
18,939

 
$
19,173

 Interest on securities
1,381

 
1,674

 
1,754

 
2,006

 
1,709

 Interest on federal funds sold
8

 
9

 
8

 
7

 
6

 Interest-bearing deposits
66

 
28

 
38

 
37

 
71

   Total interest income
18,793

 
19,446

 
19,744

 
20,989

 
20,959

 Time deposits of $100 or more
1,346

 
1,762

 
1,913

 
1,992

 
2,271

 Other deposits
2,132

 
2,018

 
2,193

 
2,370

 
2,569

 Borrowed funds
570

 
477

 
480

 
735

 
516

   Total interest expense
4,048

 
4,257

 
4,586

 
5,097

 
5,356

Net interest income
14,745

 
15,189

 
15,158

 
15,892

 
15,603

 Provision for loan losses
31,554

 
4,251

 
2,218

 
2,351

 
3,627

        Net interest income after provision for loan losses
(16,809
)
 
10,938

 
12,940

 
13,541

 
11,976

Non-interest income
 
 
 
 
 
 
 
 
 
 Service charges on deposit accounts
1,398

 
1,319

 
1,325

 
1,243

 
1,381

 Other service fees (b)
986

 
857

 
893

 
895

 
782

 Income on investment in bank owned life insurance
159

 
159

 
157

 
157

 
166

 Mortgage banking activities (b)
1,448

 
1,599

 
1,674

 
1,139

 
1,267

 Gains on sale of securities
96

 
1,348

 
300

 

 
678

 Other than temporary impairment of investments
(50
)
 

 

 

 

 Loss on sale of subsidiary
(1,019
)
 

 

 

 

 Loss on sale of loans
(2,132
)
 
(900
)
 

 

 

 Other
100

 
283

 
57

 
75

 
140

   Total non-interest income
986

 
4,665

 
4,406

 
3,509

 
4,414

Non-interest expense
 
 
 
 
 
 
 
 
 
 Salaries and employee benefits (b)
6,935

 
6,914

 
6,354

 
6,110

 
6,135

 Occupancy and equipment
1,562

 
1,794

 
1,790

 
1,851

 
1,781

 Printing and supplies
157

 
168

 
151

 
145

 
154

 Data processing
447

 
456

 
453

 
387

 
377

 Communication expense
354

 
314

 
354

 
351

 
367

 Advertising and marketing
77

 
103

 
100

 
76

 
101

 Amortization of core deposit intangible
260

 
266

 
275

 
279

 
282

 FDIC assessment expense
664

 
650

 
659

 
695

 
718

 Attorney fees
263

 
311

 
150

 
216

 
108

 Loan collection expense (b)
569

 
211

 
219

 
249

 
287

 (Gain) loss on fixed assets
153

 

 
(1
)
 
(21
)
 
13

 Net cost of operation of other real estate owned
8,136

 
1,322

 
2,745

 
1,228

 
1,086

 Other (b)
3,130

 
2,283

 
2,483

 
2,013

 
2,267

   Total non-interest income
22,708

 
14,792

 
15,732

 
13,579

 
13,676

        Income (loss) before income taxes
(38,531
)
 
811

 
1,614

 
3,471

 
2,714

 Provision for income taxes (benefit)
(14,632
)
 
54

 
(9,383
)
 

 
(211
)
        Net income (loss)
(23,899
)
 
757

 
10,997

 
3,471

 
2,925

 Preferred stock dividend and amortization of preferred stock discount
1,419

 
838

 
833

 
821

 
771

        Net income (loss) available to common shareholders
$
(25,318
)
 
$
(81
)
 
$
10,164

 
$
2,650

 
$
2,154

     Basic
$
(1.21
)
 
$

 
$
0.52

 
$
0.14

 
$
0.11

     Diluted
$
(1.21
)
 
$

 
$
0.52

 
$
0.14

 
$
0.11

 
 
 
 
 
 
 
 
 
 





 Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
 
     Basic
20,917,579

 
19,389,251

 
19,386,519

 
19,378,198

 
19,371,469

     Diluted
20,917,579

 
19,390,253

 
19,386,519

 
19,378,198

 
19,371,469

(a) Derived from audited consolidated financial statements
 
 
 
 
 
 
 
 
(b) Certain income and expense amounts have been reclassified based on a change in our mortgage reporting segment







 Yadkin Valley Financial Corporation
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
At or For the Three Months Ended
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
Basic Earnings (Loss) per Share
$
(1.21
)
 
$

 
$
0.52

 
$
0.14

 
$
0.11

Diluted Earnings (Loss) per Share
(1.21
)
 

 
0.52

 
0.14

 
0.11

Book Value per Share
3.31

 
5.36

 
5.34

 
4.92

 
4.77

 
 
 
 
 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
Return on Average Assets (annualized)
(5.15
)%
 
(0.02
)%
 
2.08
%
 
0.54
%
 
0.42
%
Return on Average Equity (annualized)
(53.53
)%
 
(0.21
)%
 
26.93
%
 
6.48
%
 
6.17
%
Net Interest Margin (annualized)(7)
3.28
 %
 
3.37
 %
 
3.39
%
 
3.54
%
 
3.16
%
Net Interest Spread (annualized)(7)
3.08
 %
 
3.19
 %
 
3.21
%
 
3.35
%
 
2.98
%
Non-interest Income as a % of Revenue(6)(7)
(13.54
)%
 
29.9
 %
 
25.55
%
 
20.73
%
 
32.14
%
Non-interest Income as a % of Average Assets (7)
0.1
 %
 
0.24
 %
 
0.23
%
 
0.18
%
 
0.26
%
Non-interest Expense as a % of Average Assets (7)
1.22
 %
 
0.76
 %
 
0.81
%
 
0.69
%
 
0.68
%
 
 
 
 
 
 
 
 
 
 
Asset Quality:
 
 
 
 
 
 
 
 
 
Loans 30-89 days past due (000's) (4)
$
14,000

 
$
13,354

 
$
10,321

 
$
10,245

 
$
25,888

Loans over 90 days past due still accruing (000's)

 

 

 

 

Nonperforming Loans (000's)
22,817

 
57,053

 
63,305

 
66,088

 
70,355

Other Real Estate Owned (000's)
8,738

 
22,294

 
25,573

 
28,751

 
24,966

Nonperforming Assets (000's)
31,555

 
79,347

 
88,878

 
94,839

 
95,321

Troubled debt restructurings (000's) (5)
17,667

 
13,929

 
12,596

 
15,259

 
17,173

Nonperforming Loans to Total Loans
1.71
 %
 
4.12
 %
 
4.53
%
 
4.69
%
 
4.78
%
Nonperforming Assets to Total Assets
1.64
 %
 
4.13
 %
 
4.57
%
 
4.80
%
 
4.78
%
Allowance for Loan Losses to Total Loans
1.88
 %
 
1.97
 %
 
2.06
%
 
2.13
%
 
2.23
%
Allowance for Loan Losses to Total Loans Held for Investment
1.92
 %
 
2.00
 %
 
2.10
%
 
2.17
%
 
2.26
%
Allowance for Loan Losses to Nonperforming Loans
110.22
 %
 
47.73
 %
 
45.49
%
 
45.49
%
 
47.31
%
Net Charge-offs/Recoveries to Average Loans (annualized)
9.74
 %
 
1.66
 %
 
0.99
%
 
1.44
%
 
1.20
%
 
 
 
 
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
 
 
 
Equity to Total Assets
8.88
 %
 
8.08
 %
 
7.95
%
 
7.26
%
 
7.05
%
Tier 1 leverage ratio(1)
8.92
 %
 
8.73
 %
 
8.55
%
 
8.30
%
 
7.99
%
Tier 1 risk-based ratio(1)
11.73
 %
 
11.18
 %
 
10.89
%
 
10.61
%
 
10.23
%
Total risk-based capital ratio(1)
12.99
 %
 
12.44
 %
 
12.15
%
 
11.87
%
 
11.49
%
 
 
 
 
 
 
 
 
 
 
Non-GAAP disclosures(2):
 
 
 
 
 
 
 
 
 
Tangible Book Value per Share
$
3.25

 
$
5.21

 
$
5.18

 
$
4.74

 
$
4.58

Return on Tangible Equity (annualized) (3)
(54.34
)%
 
(0.21
)%
 
27.54
%
 
6.63
%
 
6.34
%
Tangible Common Equity to Tangible Assets (3)
7.30
 %
 
5.44
 %
 
5.33
%
 
4.69
%
 
4.50
%
Efficiency Ratio (7)
138.07
 %
 
72.21
 %
 
77.92
%
 
67.59
%
 
66.26
%
Notes:
(1)
Tier 1 leverage, Tier 1 risk-based, and Total risk-based ratios are ratios for the bank, Yadkin Valley Bank and Trust Company as reported on Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only - FFIEC 041





(2)
Management uses these non-GAAP financial measures because it believes it is useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provides users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies.
(3)
Tangible Common Equity is the difference of shareholders' equity less preferred shares, less the sum of goodwill and core deposit intangible. Tangible Assets are the difference of total assets less the sum of goodwill and core deposit intangible.
(4)
Past due numbers exclude loans classified as nonperforming.
(5)
Nonperforming assets exclude accruing troubled debt restructured loans.
(6)
Ratio is calculated by taking non-interest income as a percentage of net interest income after provision for loan losses plus total non-interest income.
(7)
Certain income and expense amounts in the current and prior periods have been reclassified based on a change in our mortgage reporting segment.











Yadkin Valley Financial Corporation
 
 
 
 
 
 
 
Average Balance Sheets and Net Interest Income Analysis (Unaudited)
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
 
2012
 
2011
 
 
(Dollars in Thousands)
 
 
Average
 
 
 
Yield/
 
Average
 
 
 
Yield/
 
 
Balance
 
Interest
 
Rate
 
Balance
 
Interest
 
Rate
 
INTEREST EARNING ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (1,2)
$
1,369,884

 
$
17,367

 
5.04
%
(8)
$
1,480,509

 
$
19,224

 
5.15
%
(8)
Investment securities
325,578

 
1,599

 
1.95
%
 
313,760

 
1,959

 
2.48
%
 
Interest-bearing deposits & federal funds sold
124,947

 
74

 
0.23
%
 
111,936

 
78

 
0.28
%
 
Total average earning assets (1)
1,820,409

 
19,040

 
4.16
%
(6)
1,906,205

 
21,261

 
4.43
%
(6)
Non-interest earning assets
128,390

 
 
 
 
 
123,655

 
 
 
 
 
Total average assets
$
1,948,799

 
 
 
 
 
$
2,029,860

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
$
766,695

 
3,203

 
1.66
%
 
$
917,019

 
4,286

 
1.85
%
 
Other deposits
615,040

 
274

 
0.18
%
 
618,461

 
554

 
0.36
%
 
Borrowed funds
104,320

 
570

 
2.17
%
 
110,758

 
504

 
1.81
%
 
Total interest bearing liabilities
1,486,055

 
4,047

 
1.08
%
(7)
1,646,238

 
5,344

 
1.29
%
(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
263,871

 
 
 
 
 
228,398

 
 
 
 
 
Other liabilities
11,209

 
 
 
 
 
16,653

 
 
 
 
 
Total average liabilities
1,761,135

 
 
 
 
 
1,891,289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity
187,664

 
 
 
 
 
138,571

 
 
 
 
 
Total average liabilities and
 
 
 
 
 
 
 
 
 
 
 
 
   shareholders' equity
$
1,948,799

 
 
 
 
 
$
2,029,860

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST INCOME/
 
 
 
 
 
 
 
 
 
 
 
 
    YIELD (3,4)
 
 
$
14,993

 
3.28
%
(8)
 
 
$
15,917

 
3.31
%
(8)
INTEREST SPREAD (5)
 
 
 
 
3.08
%
(8)
 
 
 
 
3.14
%
(8)


(1)
Yields related to securities and loans exempt from Federal income taxes are stated on a fully tax-equivalent basis, assuming a Federal income tax rate of 35%, reduced by the nondeductible portion of interest expense.
(2)
The loan average includes loans on which accrual of interest has been discontinued.
(3)
Net interest income is the difference between income from earning assets and interest expense.
(4)
Net interest yield is net interest income divided by total average earning assets.
(5)
Interest spread is the difference between the average interest rate received on earning assets and the average rate paid on interest bearing liabilities.
(6)
Interest income for 2012 and 2011 includes $95,000 and $78,000, respectively, of accretion for purchase accounting adjustments related to loans acquired in the merger with American Community.
(7)
Interest expense for 2012 and 2011 includes $43,000 and $101,000, respectively, of accretion for purchase accounting adjustments relate to deposits and borrowings acquired in the merger with American Community.
(8)
Certain income and expense amounts have been reclassified based on a change in our mortgage reporting segment.







Yadkin Valley Financial Corporation
 
 
 
 
 
 
 
Average Balance Sheets and Net Interest Income Analysis (Unaudited)
 
 
 
 
 
 
 
 
Year Ended December 31,
 
 
2012
 
2011
 
 
(Dollars in Thousands)
 
 
Average
 
 
 
Yield/
 
Average
 
 
 
Yield/
 
 
Balance
 
Interest
 
Rate
 
Balance
 
Interest
 
Rate
 
INTEREST EARNING ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (1,2)
$
1,399,590

 
$
72,093

 
5.15
%
(8)
$
1,534,929

 
$
80,800

 
5.26
%
(8)
Investment securities
343,137

 
7,761

 
2.26
%
 
309,199

 
9,226

 
2.98
%
 
Interest-bearing deposits & federal funds sold
81,748

 
201

 
0.25
%
 
141,249

 
376

 
0.27
%
 
Total average earning assets (1)
1,824,475

 
80,055

 
4.39
%
(6)
1,985,377

 
90,402

 
4.55
%
(6)
Non-interest earning assets
125,114

 
 
 
 
 
142,193

 
 
 
 
 
Total average assets
$
1,949,589

 
 
 
 
 
$
2,127,570

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
$
813,035

 
14,176

 
1.74
%
 
$
1,025,165

 
20,475

 
2.00
%
 
Other deposits
617,724

 
1,550

 
0.25
%
 
610,620

 
3,400

 
0.56
%
 
Borrowed funds
102,895

 
2,262

 
2.2
%
 
107,725

 
2,098

 
1.95
%
 
Total interest bearing liabilities
1,533,654

 
17,988

 
1.17
%
(7)
1,743,510

 
25,973

 
1.49
%
(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
244,137

 
 
 
 
 
224,280

 
 
 
 
 
Other liabilities
14,666

 
 
 
 
 
16,617

 
 
 
 
 
Total average liabilities
1,792,457

 
 
 
 
 
1,984,407

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity
157,132

 
 
 
 
 
143,163

 
 
 
 
 
Total average liabilities and
 
 
 
 
 
 
 
 
 
 
 
 
   shareholders' equity
$
1,949,589

 
 
 
 
 
$
2,127,570

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST INCOME/
 
 
 
 
 
 
 
 
 
 
 
 
    YIELD (3,4)
 
 
$
62,067

 
3.40
%
(8)
 
 
$
64,429

 
3.25
%
(8)
INTEREST SPREAD (5)
 
 
 
 
3.21
%
(8)
 
 
 
 
3.06
%
(8)


(1)
Yields related to securities and loans exempt from Federal income taxes are stated on a fully tax-equivalent basis, assuming a Federal income tax rate of 35%, reduced by the nondeductible portion of interest expense.
(2)
The loan average includes loans on which accrual of interest has been discontinued.
(3)
Net interest income is the difference between income from earning assets and interest expense.
(4)
Net interest yield is net interest income divided by total average earning assets.
(5)
Interest spread is the difference between the average interest rate received on earning assets and the average rate paid on interest bearing liabilities.
(6)
Interest income for 2012 and 2011 includes $253,000 and $577,000, respectively, of accretion for purchase accounting adjustments related to loans acquired in the merger with American Community.
(7)
Interest expense for 2012 and 2011 includes $54,000 and $423,000, respectively, of accretion for purchase accounting adjustments relate to deposits and borrowings acquired in the merger with American Community.
(8)
Certain income and expense amounts have been reclassified based on a change in our mortgage reporting segment.